Daily Morning Report

Tuesday, May 7–Jim Wyckoff’s Morning Markets Report

World stock markets were mixed in cautious trading overnight. U.S. stock indexes are pointed toward weaker openings when the New York day session begins.

The stock, financial and commodity markets are trying to recover from the surprise developments on the U.S.-China trade front that saw President Trump threaten new tariffs on imported Chinese products. However, the marketplace is somewhat assuaged Tuesday morning as the Chinese trade delegation is still headed for Washington, D.C. for talks this week, including their chief negotiator. Also, upon reflection, many traders and investors are wondering if Trump’s threatening tweets on Sunday were just a negotiating tactic. Still, Trump’s trade advisors said Monday that the Chinese commitments on trade had seen “erosion.”

Trump tweeted that some degree of a trade deal with China needs to happen by the end of this week, or new tariffs go into effect. It’s a very hard read on the outcome of this matter. Thus, the keener uncertainty among traders and investors will play better into the hands of market bears.

Gold and silver markets bulls have been disappointed their safe-haven metals did not see more demand amid the heightened geopolitical uncertainty that includes the potential U.S.-China trade war escalation but also increased U.S.-Iran tensions. However, reports say demand from major gold-consuming country India is expected to be significantly higher on the geopolitical tensions, especially as this is the time of stronger seasonal demand for gold.

The key “outside markets” today see the U.S. dollar index near steady. Meantime, Nymex crude oil prices are weaker and trading just below $62.00 a barrel.

U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, the IDB/TIPP economic optimism index, and consumer credit.

–Jim

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The Nymex crude oil futures market bulls are in trouble and it appears a near-term market top is in place. A price uptrend on the daily bar chart has been soundly negated and the bears have technical momentum on their side, to suggest more price pressure is coming. The escalation in the U.S.-China trade dispute is a bearish element for crude, as it suggests slower global economic growth, which translates into less demand for oil. Stay tuned!

Monday, May 6–Jim Wyckoff’s Morning Markets Report

World stock markets were rattled and traded sharply lower overnight on news that President Trump tweeted a threat to further increase U.S. trade tariffs on Chinese goods. The sense of the marketplace had been that a U.S.-China trade deal was close and could be finalized late this week. Commodity markets were also roiled overnight on ideas any escalation in the U.S.-China trade war would translate into slower global economic growth. U.S. stock indexes are pointed toward sharply lower openings when the New York day session begins.

As of this writing the Chinese trade delegation was still headed to the U.S. for talks this week. Upon reflection, many traders and investors realize they should not have become so optimistic on the trade war being resolved, given Turmp’s propensity to make knee-jerk decisions.

China stock markets fell from 5% to 7% overnight, making those losses the largest one-day declines in three years.

The Chinese yuan plunged on the world foreign exchange market. The U.S. dollar index is trading slightly up today, while Nymex crude oil prices are lower and trading around $61.00 a barrel.

Adding to geopolitical concerns to start the trading week, the U.S. is sending a naval task force, including an aircraft carrier, to the Middle East as a show of force against Iran. A U.S. official said the U.S. warships are “fully prepared” to respond to any attack from Iran or others.

Gold prices are just slightly higher and not seeing much of a safe-haven bid amid the ramped-up geopolitical situation.

U.S. economic data due for release Monday includes the employment trends index and the global services PMI.

–Jim

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Friday, May 3–Jim Wyckoff’s Morning Markets Report

Asian stock markets were mixed to flat overnight, while European stocks were mostly firmer. U.S. stock indexes are pointed toward firmer openings when the New York day session begins. “Sell in May and go away.” U.S. stock indexes have sold off the first two days in May. That old saying suggests selling stocks in May and not coming back to the buy side until late summer. Such a scenario would be a bullish element for competing classes like raw commodities.

Focus is on this morning’s April U.S. employment report from the Labor Department. That report is expected to show a non-farm payrolls rise of 190,000. However, Wednesday’s very strong ADP jobs gain (up 275,000 versus expectations of up 177,000) has many thinking today’s more important Labor Department jobs number will be higher.

In overnight news, the Eurozone’s April consumer price index was reported up 1.7%, year-on-year, from a reading of up 1.4% in March. Meantime, the March producer price index was up 2.9%, year-on-year, in the Euro zone. The European Central Bank has targeted a rate of around 2% for annual Euro zone inflation.

The World Gold Council is forecasting that world central banks will buy 500 to 600 tons of gold this year, compared to around 400 tons in recent years. However, in 2018 global central banks bought 652 tons. It’s interesting and somewhat ironic that supposedly smart world central bankers continue to buy gold as a store of value, while many supposedly smart financial advisors tell individual investors to shy away from an asset that produces no yield or dividend. It can be argued that owning gold is like having a weapon for personal protection: you don’t need it until you really need it.

The key “outside markets” today see the U.S. dollar index modestly higher. Meantime, Nymex crude oil prices are near steady and trading just below $62.00 a barrel.

Other U.S. economic data due for release Friday includes the advance economic indicators report, the U.S. services PMI, and the ISM non-manufacturing report on business.

–Jim

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The Comex gold futures market remains in a 2.5-month-old downtrend on the daily bar chart and the bears have the overall near-tem technical advantage. That means the path of least resistance for prices will remain sideways to lower until a bullish technical clue surfaces to suggest otherwise. Remember, my daily reports will provide you those early chart clues on price trend changes, or acceleration. Stay tuned!

Thursday, May 2–Jim Wyckoff’s Morning Markets Report

Asian stock markets were mixed to firmer overnight, while European stocks were mixed to weaker. U.S. stock indexes are pointed toward firmer openings when the New York day session begins. U.S. stocks are at or near record and/or multi-month highs scored this week.

Traders and investors are still digesting Wednesday afternoon’s Federal Open Market Committee (FOMC) statement and press conference from Fed Chairman Jerome Powell. While the Fed made no changes in U.S. monetary policy, the statement and Powell’s comments did move markets. The FOMC statement said some members were worried that inflation is too low, which the marketplace initially read as dovish on monetary policy. However, at Powell’s press conference, when asked about worrisome low inflation, he said elements causing present lower inflation are “transitory.” While there is no clear consensus at all on the timing or direction of the next Fed interest rate move, it seems most of the marketplace now feels there is less of a chance the Fed will cut U.S. interest rates anytime soon. That’s because Powell not only said very low inflation was transitory, he was also very upbeat on assessing the U.S. economy’s prospects.

The gold market sunk Wednesday afternoon following the Fed meeting, while the U.S. dollar index rallied off its lows to post modest gains. U.S. Treasury bond and note futures prices initially rallied on the FOMC statement but then lost all those gains after Powell’s remarks. U.S. stocks rallied modestly on the Fed news.

In overnight news, the Bank of England left its monetary policy unchanged at its regular meeting today.

Also, the Euro zone’s April manufacturing purchasing managers index (PMI) came in at 47.9, which was just above expectations but still a downbeat report. A reading below 50.0 suggests contraction in the sector.

Focus will quickly turn to Friday morning’s April U.S. employment report from the Labor Department. That report is expected to show a non-farm payrolls rise of 190,000. However, Wednesday’s very strong ADP jobs gain (up 275,000 versus expectations of up 177,000) has many thinking Friday’s more important Labor Department jobs number will be higher.

The key “outside markets” today see the U.S. dollar index near steady. Meantime, Nymex crude oil prices are lower and trading just below $63.00 a barrel.

U.S. economic data due for release Thursday includes the weekly jobless claims report, the Challenger job-cuts report, preliminary productivity and costs, the ISM New York report on business, the global manufacturing PMI, and manufacturers’ shipments and inventories.

–Jim

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